Five Retirement Housekeeping Moves For The New Year

It’s 2018. Do you know what your IRA beneficiary forms say? Have you appointed someone as agent under a financial power of attorney? It’s easy to overlook such details. But reviewing retirement documents now could save you or your family grief later.

If you’re lucky, you’ll catch any mistakes in time. Sherrill Trovato, an enrolled agent in Fountain Valley, Calif. who represents taxpayers before the Internal Revenue Service, did a check-in with her widowed mom’s estate lawyer because her mom was ailing. They discovered that the paperwork her mom had filled out at a brokerage firm that housed her Individual Retirement Account listed Sherrill, and her mentally-ill brother, as beneficiaries, meaning they both would get the IRA money outright upon mom’s death. That conflicted with a trust mom and dad had set up: they intended to leave assets to the son in trust for his benefit, essential for someone unable to manage money. “’Oh my gosh! We need to do this now!’” Trovato says the lawyer told her about updating the documents. Mom redid the IRA beneficiary form; she passed away just a month later.

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If you – or your parents – have retirement accounts, you need to think about how that money is going to get distributed, and how that fits into your overall estate plan, Trovato says. Don’t wait until a family member is ill. That just adds to the stress, and it might be too late. Here’s how to start now.

Review those IRA beneficiary forms. The beneficiary form, not your will, controls who inherits an IRA after you die. Check what’s on file with your IRA custodian to make sure it reflects your current intent. Have you provided for a new spouse or child? If you’ve got grandkids, consider naming them “contingent’” beneficiaries. Naming individuals gives them the opportunity to stretch out annual IRA payouts over their lifetimes.

Update 401(k) forms, if needed. By law, your spouse gets this account if you die. If you want your kids to get any of it, you’ll need to file a signed waiver from your spouse. Warning: If you’ve recently divorced, make sure to name a new beneficiary for your 401(k), or your ex will get the money by default.

Create a financial power of attorney. With a financial power of attorney form, you designate someone to act on your behalf for all matters finance. Take this seriously. And note, it’s common for a brokerage firm to have its own POA forms, one for each account.

Check your Social Security earnings history. Sign up for a MySocialSecurity account online and make sure Uncle Sam has properly credited your earnings (and taxes paid) for 2016 and earlier years. It’s far easier to fix mistakes now than when you’re ready to retire.

Go digital but don’t throw out all the paper. Sign up for online accounts at your bank, brokerage, and any workplace retirement account providers. But hold onto an end-of-year statement for each account. Keep copies of those beneficiary designation forms along with your will or trust. And make sure your POA has copies and knows where to find the originals. If you have a Roth IRA, keep IRS Form 5498s as long as you have the account. You need them as back up to pull out contributions tax-free and penalty-free.